Unsecured Bank Loans

There's been a dramatic rise in loans against gold in the past one year, but growth in unsecured loans is slowing. Bank loans to the NBFC sector have also dipped

This comes after RBI raised risk weights on unsecured personal loans

There has been a rise in unsecured lending. The RBI has expressed concerns over lending practices

Meanwhile, SBI is evaluating if it needs more capital, Khara said. It's exploring raising capital through additional Tier-1 bonds after recently issuing Tier II bonds, he said

Promoters of DB Realty has sold nearly 3 per cent stake in the company for Rs 301 crore and infused back a substantial amount in the real estate firm for reduction of debt. In a regulatory filing, Mumbai-based DB Realty informed that "the Promoter Group has sold 1.46 crore shares of the company reflecting a 2.91 per cent stake in the company and have raised Rs 301 crore by sale of the said shares." The promoter group has infused back a substantial portion of the proceeds (net of tax) into the company as repayment of related party transactions and unsecured interest free loan, it added. "The funds so infused has enabled the company to retire its entire debt and therefore the company on a standalone basis shall be debt free on a standalone basis on or before 30th November 2023," DB Realty said. The company said it has been reducing debt from last few years. The company had a debt of Rs 1,373 crore (standalone) and Rs 3,140 crore (consolidated) as of September 30, 2021. "Since then

Unsecured personal loans jumped more than four-fold to Rs 13.32 lakh crore as of March 2023 from Rs 4.26 lakh crore in March 2017, as per a report. Overall, the number of personal loans has almost tripled during this period to Rs 51.7 lakh crore, an analysis by Care Ratings revealed. This means the personal loan books of banks and non-banks almost grew 1.5 times between FY17 and FY23, and now constitutes 30.3 per cent of the overall credit of Rs 170.5 lakh crore as of March 2023, the report said. At the end of FY17, the amount was Rs 18.6 lakh crore, or 21.5 per cent of the overall loan book, it said. Of the total personal loans, unsecured loans jumped more than four-fold to Rs 13.32 lakh crore as of March 2023 from Rs 4.26 lakh crore in March 2017, according to the agency, recording a growth rate of 23 per cent in the final year over FY22, when it stood at Rs 10.81 lakh crore. It attributed the surge in numbers to deepening income crises, and pushing of credit by fintechs and the

Central bank's directives not a complete surprise and will prompt sector to diversify business, they say

Despite having the highest credit card portfolio in terms of retail assets at over 42 per cent, private sector lender RBL Bank does not see much impact on its margins after the RBI increased the risk weight on unsecured lending. Following a massive rise in unsecured lending and delinquencies, the Reserve Bank on November 16 tightened the norms for unsecured consumer credit, asking banks and NBFCs to assign a higher risk weight. As a result, it has increased the risk weight on unsecured consumer loans by 25 percentage points to 125 and to 150 for credit cards. This had analysts pegging the capital cost, on banks alone, going up at least by Rs 84,000 crore. "Our capital (CET 1 ratio) cost will go by 60 bps because of the RBI action, but the impact on our margin will be negligible at 1-2 bps only," the bank's chief executive and managing director R Subramaniakumar told reporters on the sidelines of the IBA-Ficci-organised national banking summit here on Wednesday. The bank's capital .

While the consumer won't bear the brunt of RBI's move, companies, however, still await clarity but expect their margins to take some hit

The RBI's decision to tighten norms for unsecured personal loans is credit positive because lenders will need to allocate higher capital for such loans, thus improving their loss-absorbing buffers, Moody's Investors Service said on Monday. The Reserve Bank last week raised risk weights on unsecured retail loans, credit cards and lending to non-banking finance companies (NBFCs) by 25 percentage points. Moody's said unsecured loans have been growing rapidly in the past few years, exposing financial institutions to a potential spike in credit costs in case of sudden economic or interest rate shocks. The tightening of underwriting norms through higher risk-weighted assets is credit positive because lenders will need to allocate higher capitals for such loans improving their loss-absorbing buffers and may dampen their growth appetite, Moody's said in a statement. It said that over the past few years, India's unsecured lending segment has become very competitive, with banks, NBFCs and ..

Demand to slow down post rate increase

The banking system will need Rs 84,000 crore of excess capital due to revised unsecured loans risk weights introduced by the Reserve Bank of India, economists at the country's largest lender SBI said on Friday. In a report, the economists also said the RBI is seeking to achieve the desired objective of growth and inflation through liquidity and macro prudential measures as the repo rates have peaked out. "The immediate impact of the enhanced risk weights is the excess capital now that banks would require. As per our calculation, the banking industry needs Rs 84,000 crore of excess capital," the report said. The RBI on Thursday increased risk weights on unsecured personal loans, credit cards, and lending to Non-Banking Financial Companies (NBFCs) by 25 percentage points. The decision to raise the risk weights perhaps is an attempt by the RBI to send out a strong message of addressing any incipient financial stability risks in the system, the SBI economists said in their report. The

Value has nearly doubled in the period after the Covid-19 pandemic

According to RBI's latest Financial Stability Report, advances for unsecured retail loans rose to 25.2 per cent in March 2023 from 22.9 per cent in March 2021

The Reserve Bank of India (RBI) has expressed its concern about the growing unsecured bank credit

The RBI has instructed banks to limit their unsecured loan portfolios to the levels seen in FY23, a CEO of a private bank said

ICICI likely to issue long-term bonds, Axis mulls infra bond sale

Aakash Educational Services was acquired by Think and Learn Pvt, Byju's parent company, in April 2021 for a cash and stock deal worth $950 million

'The retail deposit mobilisation is our focus right now. We'd like to grow the retail base - all our branches are working towards it'

What are the different types of loans?

According to the RBI, banks have written off over Rs 2 lakh crore of bad loans in the fiscal ended March 2021. Find out more about the types of loans and when they are categorised as bad